Rio Tinto implements pay freeze as commodity prices drop

15 January 2016

Falling commodity prices have forced Rio Tinto to implement a pay freeze for all its employees in 2016 and examine spending on contractors and consultants.

The mining multinational will also limit travel spending, according to an email from CEO Sam Walsh sent to employees three days ago, seen by Bloomberg News.

Two of the commodities produced by Rio Tinto slumped in price at the end of last year. Prices for iron ore – used in steelmaking – fell by 45%, and copper fell by more than 20%, marking a six-year low, according to Zacks Equity Research.

“The pressure this is placing on our industry is significant and it is a tough time across the sector,” Walsh wrote, according to Bloomberg. “It is important we recognise that the pressure isn’t going to let up. This situation is not temporary.”

Last month the company reported that it expects total capital expenditure this year to be about $5bn (£3.4bn), $1bn (£6.9m) less than previously forecast.

At the time Walsh said: “Our prudent capital allocation and disciplined approach to the balance sheet have reinforced our resilience during this period of ongoing volatility.

“Our business is built around long-life, low-cost expandable assets that are complemented by best-in-class operational and commercial expertise. As we approach the start of 2016, we are well positioned to continue to provide returns for our shareholders and invest in our business.”

 

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